An Overview of Protected Cell Companies in Liechtenstein

Josef Bergt
2023

In the realm of corporate structures, the concept of a Protected Cell Company (PCC) holds a unique position. Not a distinct legal form in itself, a PCC is a configuration that can be adopted by any legal entity under Art. 243 to Art. 243h of the Liechtenstein Persons and Companies Act (PGR), provided it is mandatorily or voluntarily registered in the Commercial Register. However, European entities such as the European company (SE), the European cooperative society (SCE), and the European economic interest grouping (EWIV) are exempt from segmentation.

A PCC is characterized by its dual organizational structure, comprising a core or non-cellular part, and one or more distinct segments or cells. These cells, each with a legally permissible and purpose-consistent field of activity, are separated from each other and from the core assets. Despite their distinct operations, these cells do not possess their own legal personality; the PCC itself holds the legal personality.

Establishing a PCC can be achieved either by setting up a new company or by converting an existing legal entity into a PCC. The latter requires provisions in the articles of association and a resolution by the supreme managing body, following a special audit or expert report confirming that creditors' claims remain fully covered post-conversion. The conversion resolution must be submitted to the Office of Justice and announced publicly, with creditors given a two-month window to demand satisfaction.

The purpose of a Protected Cell Company (PCC) is strictly defined and can encompass only one or more of the following activities:

  • Undertaking common-benefit or charitable purposes as defined by Art. 107 Para. 4a of the PGR.
  • Acquiring, managing, and exploiting holdings in other companies (subsidiaries).
  • Exploiting intellectual property rights, including copyrights, patents, brands, designs, or models.
  • Implementing deposit guarantee and investor protection schemes in accordance with the applicable European Economic Area (EEA) legislation.

The PCC's organizational structure is based on the provisions applicable to the respective legal form. However, it is mandatory for a PCC to have an auditor. The articles of the PCC must include a declaration of its status as a PCC, the naming of individual segments, and the fields of activity of these segments.

The PCC's assets comprise the core assets and the assets of individual segments. Regulations concerning the minimum capital of the respective legal form apply to the PCC's core assets. Additionally, each segment must have a legal reserve equal to the minimum capital of the PCC.

In terms of liability, a PCC must inform third parties of its status as a PCC during contractual negotiations. The segment whose assets are liable for the legal relationship in question must be identified. If the core assets are liable, this must also be indicated.

In the event of bankruptcy, separate proceedings may be conducted over the PCC itself and each of the individual segment assets. The PCC is also obliged to render proper accounts and is subject to disclosure obligations if prescribed for the respective legal form. The audit and review obligations are based on the respective legal form of the PCC.

Source: Factsheet AJU/ h70.034e.01

Executive Summary:

  • A PCC is not a separate legal form but a configuration that can be adopted by any legal entity under the Liechtenstein PGR.
  • A PCC comprises a core or non-cellular part, and one or more distinct segments or cells, each with a legally permissible and purpose-consistent field of activity.
  • Establishing a PCC can be achieved either by setting up a new company or by converting an existing legal entity into a PCC.
  • The PCC's assets comprise the core assets and the assets of individual segments.
  • The purpose of a Protected Cell Company (PCC) is strictly defined.
  • In terms of liability, a PCC must inform third parties of its status as a PCC during contractual negotiations.
  • In the event of bankruptcy, separate proceedings may be conducted over the PCC itself and each of the individual segment assets.
  • The PCC is also obliged to render proper accounts and is subject to disclosure obligations if prescribed for the respective legal form.

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